Annuity Payout Calculator
Estimate your monthly annuity payout based on your principal amount, growth rate, and payout period.
This is an educational estimate only — actual annuity payouts depend on the specific contract, insurer pricing, fees, riders, and current interest rate environment. Consult a licensed financial advisor or annuity provider for exact figures.
How does an annuity payout work?
An annuity converts a lump sum of money — your principal — into a stream of regular payments over a set period, or in some cases for the rest of your life. During the payout phase, the insurer pays you back your principal plus a return, spread evenly across the chosen payout period, so the same total amount of money produces a higher monthly payment over a shorter period and a lower monthly payment over a longer one.
The math behind the payout calculation
This calculator uses the standard annuity payment formula: monthly payout equals principal multiplied by the monthly rate factor divided by a compounding factor, essentially the same amortization math used to calculate a loan payment, just applied in reverse — instead of paying down a loan, the insurer is paying down your principal to you, with interest, until the balance reaches zero at the end of the payout period. A higher assumed growth rate or a shorter payout period both increase your monthly payment, since the money has less time to be spread across payments.
Choosing your payout period
Shorter periods (10 years) provide higher monthly income but for a limited window, while longer periods (20 years or lifetime) provide smaller monthly payments that last much longer, protecting against the risk of outliving your money. "Lifetime" payout options in real annuity contracts are priced using actuarial life expectancy tables specific to your age and sex, not a fixed number of years — this calculator approximates lifetime payouts using an illustrative 25-year period for simplicity, which will differ from an actual insurer's quote. This is an educational estimate only; get a personalized illustration from a licensed annuity provider before making a purchase decision.
Frequently Asked Questions
How much monthly income will a $200,000 annuity pay?
It depends heavily on the growth rate assumption and payout period, but at a 4% rate over 15 years, a $200,000 annuity might pay roughly $1,400-$1,500 per month. Use the calculator above with your own numbers for a personalized illustrative estimate.
Does a longer payout period mean a lower monthly payment?
Yes. Spreading the same principal and growth over a longer period, such as 20 years instead of 10, results in a smaller monthly payment since the total payout is distributed across more payments, though the total amount paid over time can end up higher due to additional growth.
What is the difference between an immediate and a deferred annuity?
An immediate annuity begins paying out shortly after you deposit the principal, while a deferred annuity accumulates growth for a period of years before payouts begin, typically resulting in a larger effective principal and higher payout once distributions start.
How is a "lifetime" annuity payout actually calculated by insurers?
Real insurers use actuarial life expectancy tables specific to your age and sex, not a fixed number of years, to price lifetime payout options. This calculator approximates a lifetime payout using an illustrative 25-year period for simplicity, which will differ from an actual insurer's personalized quote.
Are annuity payouts taxed?
It depends on how the annuity was funded. Payouts from a qualified annuity (funded with pre-tax retirement money) are generally fully taxable as ordinary income, while payouts from a non-qualified annuity (funded with after-tax money) are typically only partially taxable, since a portion represents return of your original principal.
What happens if I die before the payout period ends?
It depends on the specific contract. Some annuities include a period-certain guarantee that continues payments to a beneficiary for the remainder of the term, while pure lifetime annuities without a guarantee period may stop payments entirely at death, so it's important to review the contract's death benefit provisions.
Is an annuity a good way to generate retirement income?
Annuities can provide predictable, guaranteed income and protection against outliving your savings, which appeals to many retirees, but they typically come with fees, surrender charges, and less liquidity than other investments. Whether an annuity fits your situation depends on your broader retirement income plan and risk tolerance.
How does the growth rate assumption affect my payout?
A higher assumed growth rate increases your monthly payout for the same principal and payout period, since more interest accrues on the remaining balance throughout the payout schedule. Real annuity contracts lock in a rate set by the insurer at the time of purchase, which may differ from this calculator's assumption.